Real estate in 2018

I don't have a crystal ball, but I like to share what I see in the trenches of residential real estate sales every day. To keep things short and sweet I want to point out 3 major changes that we will see in 2018. We will see slightly increased mortgage rates, a continued inventory shortage that rises closer to normal, and continued price growth that slows to be closer to normal. 

What this means is that we will see a return towards normal from the rapid price growth and comically low interest rates that we have seen for nearly half a decade. 

Lets dive a little bit deeper into those three changes. 

1) Increased Mortgage Rates
The Fed raised the benchmark interest rate three times in 2017 and will likely raise it by a quarter point three more times in 2018. The Fed rate hikes in 2017  didn't have a huge impact on mortgage rates. The benchmark interest doesn't directly correlate to the yield on US Treasury notes or mortgage rates but they do historically go hand in hand. The upward pressure of rate hikes will increase mortgage rates this year. It is a near certainty. Don't be surprised if mortgage rates approach or rise above 5% by the end of 2018. Keep in mind that historically, anything under 6% is considered a smokin' good interest rate. 

2) Slightly Increased Inventory

The October peak in the year's inventory and the the large seasonal drop off in inventory at the end of 2017 look very similar to what we saw at the end of 2016. In both years we had extremely low inventory all year, inventory started to increase significantly at the end of the summer until it hit a peak of roughly 3000 active listings (Salt Lake County), and then dropped by about a third. Last year the inventory remained near the low point for months. This year I think we will likely see Salt Lake County inventory rising to 3000+ while it is still cold and snowy outside. 

What does this mean? Well not a whole lot. Inventories increasing to 3000+ is a return towards normal from what we have seen in the last few years where there are significantly more buyers than sellers. 

3) Continued Price Appreciation But Trending Back Toward Reality 

The average home price on the Wasatch Front is the highest it has ever been. A strong economy and immigration are a great thing, but keep in mind that much of the rapid price growth is due to limited inventory. The limited inventory created a lot of multiple offer scenarios (bidding wars) and a lot of buyers willing to pay above market. Appreciation is going to slow from the fast paced 10%+ kind of numbers that we have seen in the past years. Most of what I am reading projects 7% to 10% price growth in the Wasatch Front. I am slightly less bullish. I am guessing that we will see 5% to 8% price growth. 

So is it a good time to buy? A good time to sell? It is easier than normal to sell houses in the current sellers market, rates are still low, and inventories should increase to make a purchase less frustrating. The primary reason that it is a good time for transactions is that mortgage rates are still at near histrionic lows. When rates rise, consumers pay a higher monthly payment for the same product. The ding in affordability will change what people can afford to buy. 

If you are thinking of upgrading homes this is a great time to do it. Rates are still low and everything points to having a great investment on your future dream home where appreciation will bring more financial gain in real terms.  

Thoughts of upgrading? Our objective is to net you the highest possible proceeds in the least amount of time with the least amount of problems and we have a PROVEN TRACK RECORD. Also happy to help you find your dream home. Give me a call at 801-712-9748, email me at [email protected], or SCHEDULE A CALL to get started.